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Dignity Health contended the Plan was not governed by ERISA because it is a “church plan,” explicitly exempt from ERISA.

ISSUE: Whether ERISA requires a church plan to have been established by a church?

HELD: Dignity’s Pension Plan was governed by ERISA. Dignity did not qualify for the “Church Plan” exemption because it is not a “Church.”

RATIONALE:

“Text (of the ERISA statute) and the history confirm that a church plan must still be established by a church. Because Dignity is not a church or an association of churches, and does not argue that it is, the Court concludes that Dignity does not have the statutory authority to establish its own church plan….” Op. at 12.

“[T]he Court declines to defer to the IRS’s (‘three decades’ of) interpretation of the ERISA statute here.” Op. at 5.

“The IRS’s private letter rulings apply only to the persons or entities who request them and are not entitled to judicial deference.” Op. at 5.

“[W]e must presume that Congress acted intentionally in using the words ‘establish and maintain’…as something only a church can do.” Op. at 8.

“The Court acknowledges that the position it takes here runs contrary to several cases outside this circuit….” Op. at 9

KEY TAKE AWAY: Watch out for this case in ERISA pension litigation. The decision may also play an important role in Long Term Disability litigation, as it supports a substantial narrowing of the Church Plan exemption.

Compare jurisdictions:Litigation: Enforcement of Foreign Judgments

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